Face the Facts: What Prospect Medical Holdings bankruptcy could mean for you

After three years of trying to purchase three Connecticut hospitals, Yale New Haven Health is starting to walk away from a deal with Prospect Holdings.

The state tried to help broker that deal with Prospect, but it declared bankruptcy this past week.

So what does that mean for patients and their doctors? NBC Connecticut’s Mike Hydeck spoke with Senator Jeff Gordon (R-Woodstock), who is also a medical doctor by trade, to provide some perspective.

Mike Hydeck: So let’s start with this deal. Why do you think it fell through? Are any of these three hospitals in danger of closing or having to layoff staff? Where does it go from here?

Jeff Gordon: There’s a real danger. They can close and layoff staff if this does not get solved quickly. The bankruptcy proceedings that Prospect’s in give some protections, but I really want to see Yale, which is still interested in purchasing the hospitals, be able to do that, keep the doors open so nobody loses their jobs, people get their paychecks, and patients get the care.

Mike Hydeck: So for people who don’t know how states and the federal government are involved in this. We’re actually a creditor in Prospect Holdings, I guess, loan to try to mitigate their finances. The State of Connecticut is. We have a vested interest in trying to see this deal go through, correct?

Jeff Gordon: Oh, absolutely. We are a major creditor. They owe a lot of money in back taxes they haven’t paid, and we have a huge interest in making certain people get the care they need at each one of these hospitals, and nobody loses their job as a result.

Mike Hydeck: So are there federal regulations they have to follow, too, in a deal like this? Because healthcare is a necessity in some of those hospitals in rural areas, and if they go away, that’s a big impact.

Jeff Gordon: There are some federal laws, but it’s really up to the state of Connecticut, and this is where the state of Connecticut really needs to take action now. I believe it should have taken action earlier, but it has to absolutely now, and hopefully we’ll do that in a time frame that’s relatively short.

Mike Hydeck: So in Yale New Haven’s releases on this topic, they said, ‘Look, when we started digging through the finances and we walked through the facilities, we saw the facilities were poorly maintained or not maintained at all. There was mismanagement throughout the organization.’ You’ve probably read the report. Is that a fair characterization? And then how does the state help to mitigate something like this?

Jeff Gordon: I believe that’s a fair characterization. We’re learning more and more that these for-profit private equities have not been telling the truth. A huge congressional report came out this month highlighting that nationally. So we’re going to uncover a lot of the facts during this bankruptcy protection. Yale does have a very valid point, but this highlights why the state needs to take action now. We can’t let it slide any lower.

Mike Hydeck: So when you go to buy a house or you go to buy a business, you do your due diligence. Did it take three years to go through this paperwork? It seems like a long time. Maybe it’s a complex transaction, so it takes longer than your average transaction, but is that a long period of time to try to get that data and understand the circumstances of what you’re about to purchase?

Jeff Gordon: Oh, absolutely it is. In fact, in Massachusetts and Rhode Island, they get more complicated things done with hospitals in a shorter time frame than, evidently, the Office of Health Strategy was able to. And that’s why one of my bills, Putting Patients Over Profits, and another bill on certificate of need is trying to reform this, so we don’t get into these lengthy delays of approvals. And now look what happens.

Mike Hydeck: So that’ll include a timeline when a deal like this is done?

Jeff Gordon: A 180-day timeline, very strict. Massachusetts and Rhode Island get it done within those timelines. Why can’t Connecticut?

Mike Hydeck: Well, who’s to blame here? Is the purchaser of these three hospitals not going through the paperwork fast enough? Or is the state holding something up, in your estimation?

Jeff Gordon: I believe it’s been the state holding it up. It’s a complicated deal, but if you really talk with folks involved, sure Prospect wasn’t being forthcoming with everything it should have been, but the state really was very delaying this, and we were pushing the state very much so to approve the deal. It just took way too long, and I’ve never gotten any good answers about why, and that’s why we need to reform this, because we can’t let these things happen and then look what happens now. We’re dealing with hospitals that are on the edge.

Mike Hydeck: So does that agency need to be reformed? Do they need more accountants so they can go through everything? How do you fix it? Like if it’s their problem, how would you like to see that department changed so this doesn’t happen again?

Jeff Gordon: There needs to be very serious reform for certificate of need. I, along with some fellow senators, have a very serious proposal, once again, to reform it. Common sense, simple things we can get done, and I’m hopeful we can get it done, but we just have to fight the bureaucracy to make certain that it’s reformed in the right way.

Mike Hydeck: Now, at a recent news conference, Governor Lamont said, ‘Look, if this sale falls through, there are other people lining up to buy this.’ But does that start the clock at zero again?

Jeff Gordon: Yes, it could. And we’ve heard, well, we can streamline that review. Well, if it could be streamlined now, why couldn’t have been streamlined before? It’s double talk. I hope Yale will end up buying. I’ve spoken with Yale. They are interested. We have to deal with the bankruptcy court, of course, but if we have to go to somebody else, look what happened in Massachusetts with the far worse situation, with Stuart Health. That became a massive, expensive mess, and they lost two hospitals, despite the state stepping in.

Mike Hydeck: I hope that doesn’t happen here.

Jeff Gordon: I hope not.